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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Wednesday, 16 December 20
CHINA TO BOOST DOMESTIC SUPPLY - FITCH
China’s benchmark Qinhuangdao 5,500kcal/kg coal price rose above the government’s upper yellow interval of CNY600/tonne in early Octobe ...
Wednesday, 16 December 20
INDONESIAN COAL RECOVERING - FITCH
Commenting on Indonesian coal, Fitch Ratings, the Indonesian 4,200 kcal index has begun to recover, improving to over USD 29 in November compared t ...
Tuesday, 15 December 20
NEWCASTLE PRICES RECOVER - FITCH
Prices for the benchmark Newcastle 6,000 kcal/kg grade coal have rebounded to over USD 70/tonne since late November as major Asian economies ease l ...
Tuesday, 15 December 20
APAC COAL PRICES REBOUND ON IMPROVED DEMAND AND SUPPLY CUTS - FITCH RATINGS
Prices for the benchmark Newcastle 6,000kcal/kg grade coal have rebounded to over USD70/tonne since late November as major Asian economies ease loc ...
Tuesday, 15 December 20
CHINA EXTENDS FULL OPEN GESTURE TO IMPORTED COAL EXCEPT FOR AUSTRALIA - GLOBAL TIMES
Domestic, overseas suppliers will take up share with easier clearance
China's top economic planner on Saturday gave approval to ...
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- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- London Commodity Brokers - England
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Development Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Cement Manufacturers Association - India
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- Maharashtra Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Meralco Power Generation, Philippines
- The University of Queensland
- Eastern Coal Council - USA
- Gujarat Mineral Development Corp Ltd - India
- Lanco Infratech Ltd - India
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- Price Waterhouse Coopers - Russia
- Globalindo Alam Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Maheswari Brothers Coal Limited - India
- Banpu Public Company Limited - Thailand
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Altura Mining Limited, Indonesia
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Africa Commodities Group - South Africa
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- Chamber of Mines of South Africa
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- Orica Mining Services - Indonesia
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- GMR Energy Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- Bahari Cakrawala Sebuku - Indonesia
- Parliament of New Zealand
- Vedanta Resources Plc - India
- Posco Energy - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Indogreen Group - Indonesia
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Sindya Power Generating Company Private Ltd
- Oldendorff Carriers - Singapore
- Mercuria Energy - Indonesia
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- Mintek Dendrill Indonesia
- Global Green Power PLC Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Renaissance Capital - South Africa
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- Gujarat Sidhee Cement - India
- Heidelberg Cement - Germany
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- TeaM Sual Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Mercator Lines Limited - India
- MS Steel International - UAE
- Indonesian Coal Mining Association
- Attock Cement Pakistan Limited
- The Treasury - Australian Government
- Kepco SPC Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- Manunggal Multi Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- Anglo American - United Kingdom
- Latin American Coal - Colombia
- Kalimantan Lumbung Energi - Indonesia
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Bangladesh Power Developement Board
- Dalmia Cement Bharat India
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Directorate Of Revenue Intelligence - India
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- Therma Luzon, Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Petron Corporation, Philippines
- Baramulti Group, Indonesia
- Eastern Energy - Thailand
- VISA Power Limited - India
- Meenaskhi Energy Private Limited - India
- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Planning Commission, India
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
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